BILL NUMBER: AB 1950	CHAPTERED  09/20/00

	CHAPTER   565
	FILED WITH SECRETARY OF STATE   SEPTEMBER 20, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 18, 2000
	PASSED THE ASSEMBLY   AUGUST 23, 2000
	PASSED THE SENATE   AUGUST 22, 2000
	AMENDED IN SENATE   AUGUST 10, 2000
	AMENDED IN SENATE   JULY 6, 2000
	AMENDED IN ASSEMBLY   APRIL 24, 2000

INTRODUCED BY   Assembly Member Rod Pacheco

                        FEBRUARY 15, 2000

   An act to add Sections 765.5 and 6850.5, to the Financial Code,
and to amend Sections 2351, 2359, 2401, 2403, and 2620 of, and to add
Sections 2111.5 and 2401.6 to, the Probate Code, relating to
conservatorship and guardianship.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1950, Rod Pacheco.  Conservatorships and guardianships.
   Existing law provides procedures by which banks and trust
companies are required to handle deposits from an estate, as
specified, that are subject to a court order.  Existing law also
provides that a savings association may accept fiduciary savings
accounts from specified parties for a named beneficiary or
beneficiaries.
   This bill would require banks, trust companies, and savings
associations to send specified documents to the court having
jurisdiction of a guardianship or conservatorship when a guardian or
conservator, pursuant to letters of guardianship or conservatorship,
opens an account for the estate, or changes the name of an existing
account to reflect the guardianship or conservatorship.
   Existing law requires that a guardian or conservator of a person
be responsible for the care, custody, control, and education of a
ward or conservatee, subject to a court's determination of the extent
of those powers, as specified.
   This bill would provide that a guardian or conservator of a
person, in exercising his or her powers, may not hire or refer
business to an entity in which he or she has a financial interest
except with court authorization following a disclosure to the court
in writing of his or her financial interest, as defined, in the
entity.  This bill would also provide that when a guardian or
conservator of a person petitions a court for approval of property
transactions, he or she must disclose certain family relationships,
as defined, with other parties to the transaction.  A violation of
these provisions would result in rescission of the transaction and
potential liability for damages and a civil penalty or a fine.
   Existing law provides that a guardian, conservator, or limited
conservator of an estate is responsible for the management and
control of the estate, and shall use ordinary care and diligence in
exercising his or her powers.
   This bill would provide that a guardian or conservator or limited
conservator of an estate, in exercising his or her powers, may not
hire or refer business to an entity in which he or she has a
financial interest except with court authorization following a
disclosure to the court in writing of his or her financial interest,
as defined, in the entity.  This bill would also provide that when a
guardian or conservator of an estate petitions a court for approval
of property transactions, he or she must disclose certain family
relationships, as defined, with other parties to the transaction.  A
violation of these provisions would result in rescission of the
transaction and potential liability for damages and a civil penalty
or a fine.
   Existing law requires that a guardian or conservator use ordinary
care and diligence in managing and controlling an estate.  Existing
law further provides that a guardian or conservator who breaches a
fiduciary duty is liable for, among other items, loss in the value of
the estate, lost profits, and interest on these amounts.
   This bill would provide that any surcharge that a guardian or
conservator incurs as a result of the above-described liability may
not be paid by or offset against future fees or wages to be provided
by the estate to the guardian or conservator.
   Existing law provides that a guardian or conservator shall make a
periodic accounting, as specified, of the estate of the ward or
conservatee after one year from the time of appointment, and not less
than biennially, unless otherwise ordered by the court.  Existing
law further provides that a guardian or conservator shall make a
final accounting following the death of the ward or conservatee, to
include an account for the period ending on the date of death and a
separate account for the period subsequent to the date of death.
   This bill would require that, as part of the above-described
accountings, a guardian or conservator submit copies of specified
account statements from financial institutions where estate money is
deposited.
   Existing law provides that the superior court has jurisdiction
over guardianship and conservatorship proceedings.
   This bill would prohibit any court official or employee, or any
person related by blood or marriage, as defined, who is involved in
the appointment of a conservator or guardian, or the processing of
any document relating to a conservator or guardian, from purchasing,
leasing, or renting the personal or real property from the estate of
a conservatee or a ward whom the conservator or guardian represents.
A violation of these provisions would result in rescission of the
property transaction and potential liability for damages and a civil
penalty or a fine.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 765.5 is added to the Financial Code, to read:

   765.5.  When a guardian or conservator, pursuant to letters of
guardianship or conservatorship, opens an account for the estate in a
bank or trust company, or changes the name of an existing account to
reflect the guardianship or conservatorship, the bank or trust
company shall send to the court having jurisdiction of the
guardianship or conservatorship a copy of the documents that evidence
the change.
  SEC. 2.  Section 6850.5 is added to the Financial Code, to read:
   6850.5.  When a guardian or conservator, pursuant to letters of
guardianship or conservatorship, opens an account for the estate in a
savings association, or changes the name of an existing account to
reflect the guardianship or conservatorship, the savings association
shall send to the court having jurisdiction of the guardianship or
conservatorship a copy of the documents that evidence the change.
  SEC. 3.  Section 2111.5 is added to the Probate Code, to read:
   2111.5.  (a) Except as provided in subdivision (b), every court
official or employee who has duties or responsibilities related to
the appointment of a guardian or conservator, or the processing of
any document related to a guardian or conservator, and every person
who is related by blood or marriage to a court official or employee
who has these duties, is prohibited from purchasing, leasing, or
renting any real or personal property from the estate of the ward or
conservatee whom the guardian or conservator represents.  For
purposes of this subdivision, a "person related by blood or marriage"
means any of the following:
   (1) A person's spouse.
   (2) Relatives within the second degree of lineal or collateral
consanguinity of a person or a person's spouse.
   (b) A person described in subdivision (a) is not prohibited from
purchasing real or personal property from the estate of the ward or
conservatee whom the guardian or conservator represents where the
purchase is  made under terms and conditions of a public sale of the
property.
   (c) A violation of this section shall result in the rescission of
the purchase, lease, or rental of the property.  Any losses incurred
by the estate of the ward or conservatee because the property was
sold or leased at less than fair market value shall be deemed as
charges against the guardian or conservator under the provisions of
Sections 2401.3 and 2401.5.  The court shall assess a civil penalty
equal to three times the charges against the guardian, conservator,
or other person in violation of this section, and may assess punitive
damages as it deems proper.  If the estate does not incur losses as
a result of the violation, the court shall order the guardian,
conservator, or other person in violation of this section to pay a
fine of up to five thousand dollars ($5,000) for each violation.  The
fines and penalties provided in this section are in addition to any
other rights and remedies provided by law.
  SEC. 4.  Section 2351 of the Probate Code is amended to read:
   2351.  (a) Subject to subdivision (b), the guardian or
conservator, but not a limited conservator, has the care, custody,
and control of, and has charge of the education of, the ward or
conservatee.
   (b) Where the court determines that it is appropriate in the
circumstances of the particular conservatee, the court, in its
discretion, may limit the powers and duties that the conservator
would otherwise have under subdivision (a) by an order stating either
of the following:
   (1) The specific powers that the conservator does not have with
respect to the conservatee's person and reserving the powers so
specified to the conservatee.
   (2) The specific powers and duties the conservator has with
respect to the conservatee's person and reserving to the conservatee
all other rights with respect to the conservatee's person that the
conservator otherwise would have under subdivision (a).
   (c) An order under this section (1) may be included in the order
appointing a conservator of the person or (2) may be made, modified,
or revoked upon a petition subsequently filed, notice of the hearing
on the petition having been given for the period and in the manner
provided in Chapter 3 (commencing with Section 1460) of Part 1.
   (d) The guardian or conservator, in exercising his or her powers,
may not hire or refer any business to an entity in which he or she
has a financial interest except upon authorization of the court.
Prior to authorization from the court, the guardian or conservator
shall disclose to the court in writing his or her financial interest
in the entity.  For the purposes of this subdivision, "financial
interest" shall mean (1) an ownership interest in a sole
proprietorship, a partnership, or a closely held corporation, or (2)
an ownership interest of greater than 1 percent of the outstanding
shares in a publicly traded corporation, or (3) being an officer or a
director of a corporation.  This subdivision shall apply only to
conservators and guardians required to register with the Statewide
Registry under Chapter 13 (commencing with Section 2850).
  SEC. 5.  Section 2359 of the Probate Code is amended to read:
   2359.  (a) Upon petition of the guardian or conservator or ward or
conservatee or other interested person, the court may authorize and
instruct the guardian or conservator or approve and confirm the acts
of the guardian or conservator.
   (b) Notice of the hearing on the petition shall be given for the
period and in the manner provided in Chapter 3 (commencing with
Section 1460) of Part 1.
   (c) (1) When a guardian or conservator petitions for the approval
of a purchase, lease, or rental of real or personal property from the
estate of a ward or conservatee, the guardian or conservator shall
provide a statement disclosing the family or affiliate relationship
between the guardian and conservator and the purchaser, lessee, or
renter of the property, and the family or affiliate relationship
between the guardian or conservator and any agent hired by the
guardian or conservator.
   (2) For the purposes of this subdivision, "family" means a person'
s spouse or relatives within the second degree of lineal or
collateral consanguinity of a person or a person's spouse.  For the
purposes of this subdivision, "affiliate" means an entity that is
under the direct control, indirect control, or common control of the
guardian or conservator.
   (3) A violation of this section shall result in the rescission of
the purchase, lease, or rental of the property.  Any losses incurred
by the estate of the ward or conservatee because the property was
sold or leased at less than fair market value shall be deemed as
charges against the guardian or conservator under the provisions of
Sections 2401.3 and 2401.5.  The court shall assess a civil penalty
equal to three times the charges against the guardian, conservator,
or other person in violation of this section, and may assess punitive
damages as it deems proper.  If the estate does not incur losses as
a result of the violation, the court shall order the guardian,
conservator, or other person in violation of this section to pay a
fine of up to five thousand dollars ($5,000) for each violation.  The
fines and penalties provided in this section are in addition to any
other rights and remedies provided by law.
  SEC. 6.  Section 2401 of the Probate Code is amended to read:
   2401.  (a) The guardian or conservator, or limited conservator to
the extent specifically and expressly provided in the appointing
court's order, has the management and control of the estate and, in
managing and controlling the estate, shall use ordinary care and
diligence.  What constitutes use of ordinary care and diligence is
determined by all the circumstances of the particular estate.
   (b) The guardian or conservator:
   (1) Shall exercise a power to the extent that ordinary care and
diligence requires that the power be exercised.
   (2) Shall not exercise a power to the extent that ordinary care
and diligence requires that the power not be exercised.
   (c) The guardian or conservator, in exercising his or her powers,
may not hire or refer any business to an entity in which he or she
has a financial interest except upon authorization of the court.
Prior to authorization from the court, the guardian or conservator
shall disclose to the court in writing his or her financial interest
in the entity.  For the purposes of this subdivision, "financial
interest" shall mean (1) an ownership interest in a sole
proprietorship, a partnership, or a closely held corporation, or (2)
an ownership interest of greater than 1 percent of the outstanding
shares in a publicly held corporation, or (3) being an officer or a
director of a corporation.  This subdivision shall apply only to
conservators and guardians required to register with the Statewide
Registry under Chapter 13 (commencing with Section 2850).
  SEC. 7.  Section 2401.6 is added to the Probate Code, to read:
   2401.6.  Any surcharge that a guardian or conservator incurs under
the provisions of Sections 2401.3 or 2401.5 may not be paid by or
offset against future fees or wages to be provided by the estate to
the guardian or conservator.
  SEC. 8.  Section 2403 of the Probate Code is amended to read:
   2403.  (a) Upon petition of the guardian or conservator, the ward
or conservatee, a creditor, or other interested person, the court may
authorize and instruct the guardian or conservator, or approve and
confirm the acts of the guardian or conservator, in the
administration, management, investment, disposition, care,
protection, operation, or preservation of the estate, or the
incurring or payment of costs, fees, or expenses in connection
therewith.
   (b) Notice of the hearing on the petition shall be given for the
period and in the manner provided in Chapter 3 (commencing with
Section 1460) of Part 1.
   (c) (1) When a guardian or conservator petitions for the approval
of a purchase, lease, or rental of real or personal property from the
estate of a ward or conservatee, the guardian or conservator shall
provide a statement disclosing the family or affiliate relationship
between the guardian and conservator and the purchaser, lessee, or
renter of the property, and the family or affiliate relationship
between the guardian or conservator and any agent hired by the
guardian or conservator.
   (2) For the purposes of this subdivision, "family" means a person'
s spouse or relatives within the second degree of lineal or
collateral consanguinity of a person or a person's spouse.  For the
purposes of this subdivision, "affiliate" means an entity that is
under the direct control, indirect control, or common control of the
guardian or conservator.
   (3) A violation of this section shall result in the rescission of
the purchase, lease, or rental of the property.  Any losses incurred
by the estate of the ward or conservatee because the property was
sold or leased at less than fair market value shall be deemed as
charges against the guardian or conservator under the provisions of
Sections 2401.3 and 2401.5.  The court shall assess a civil penalty
equal to three times the charges against the guardian, conservator,
or other person in violation of this section, and may assess punitive
damages as it deems proper.  If the estate does not incur losses as
a result of the violation, the court shall order the guardian,
conservator, or other person in violation of this section to pay a
fine of up to five thousand dollars ($5,000) for each violation.  The
fines and penalties provided in this section are in addition to any
other rights and remedies provided by law.
  SEC. 9.  Section 2620 of the Probate Code is amended to read:
   2620.  (a) At the expiration of one year from the time of
appointment and thereafter not less frequently than biennially,
unless otherwise ordered by the court, the guardian or conservator
shall present the account of the guardian or conservator to the court
for settlement and allowance in the manner provided in Chapter 4
(commencing with Section 1060) of Part 1 of Division 3.
   (b) The final account of the guardian or conservator following the
death of the ward or conservatee shall include an account for the
period that ended on the date of death and a separate account for the
period subsequent to the date of death.
   (c) As part of the first accounting required by subdivision (a),
the guardian or conservator shall submit to the court a copy of the
account statement from any financial institution where money
belonging to the estate is deposited that accounts for the period
immediately preceding the date the guardian or conservator was
appointed and the account statement from any financial institution
where money belonging to the estate is deposited that accounts for
the period immediately preceding the date the accounting is filed.
As part of subsequent accountings and the accounting required by
subdivision (b), the guardian or conservator shall submit to the
court the most recent account statement from any financial
institution where money belonging to the estate is deposited.  The
account statements from any financial institution submitted pursuant
to this section shall be confidential and subject to discovery only
upon an order of the court.
